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Friday, November 17, 2017

New Tennessee Supreme Court Opinion: The Collateral Source Rule Is Alive and Well!

We granted this appeal to address whether our holding in West v. Shelby County
Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), applies in personal injury cases. We
hold that it does not. West held that “reasonable charges” for medical services under
Tennessee’s Hospital Lien Act, Tennessee Code Annotated sections 29-22-101 to –107
(2012), are the discounted amounts a hospital accepts as full payment from patients’
private insurers, not the full, undiscounted amounts billed to patients. West, 459 S.W.3d
at 46. West defined “reasonable charges” in the context of interpreting the Hospital Lien
Act, and its holding is limited to that Act. As an alternative argument, we are asked in
this appeal to consider applying the principles in West to the determination of reasonable
medical expenses in personal injury cases. Doing so involves the collateral source rule,
which excludes evidence of benefits to the plaintiff from sources collateral to the
tortfeasor and precludes the reduction of the plaintiff’s damage award by such collateral
payments. The rule is based on the principles that tortfeasors should be responsible for
all of the harm they cause and that payments from collateral sources intended to benefit
an injured party should not be used to reduce the liability of the party who inflicted the
injury. After a thorough review of court decisions in Tennessee and across the country
on the collateral source rule, we decline to alter existing law in Tennessee. We hold that
the collateral source rule applies in this personal injury case, in which the collateral
benefit at issue is private insurance. Consequently, the plaintiffs may submit evidence of
the injured party’s full, undiscounted medical bills as proof of reasonable medical
expenses. Furthermore, the defendants are precluded from submitting evidence of
discounted rates accepted by medical providers from the insurer to rebut the plaintiffs’
proof that the full, undiscounted charges are reasonable. The defendants remain free to
submit any other competent evidence to rebut the plaintiffs’ proof on the reasonableness
of the medical expenses, so long as that evidence does not contravene the collateral source rule. The decision of the Court of Appeals is affirmed in part and reversed in part,
and the case is remanded to the trial court for further proceedings.

(Emphasis added via italics and bolding.) Here is a link to the slip opinion: